UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE
13a-16
OR
15d-16
UNDER THE SECURITIES EXCHANGE
ACT OF 1934
Date of Report: August 24, 2018
Commission File Number
001-35345
PACIFIC DRILLING S.A.
8-10,
Avenue de la Gare
L-1610
Luxembourg
(Address of principal executive offices)
Indicate by check mark whether
the registrant files or will file annual reports under cover of Form
20-F
or Form
40-F.
Form
20-F ☒
Form
40-F ☐
Indicate by check mark if the registrant is submitting the Form
6-K
in paper as permitted by Regulation
S-T
Rule 101(b)(1):
Yes ☐
No ☒
Indicate by check mark if the registrant is submitting the Form
6-K
in paper as
permitted by Regulation
S-T
Rule 101(b)(7):
Yes ☐ No ☒
Indicate by check mark whether the registrant by furnishing the information contained in this Form, is also thereby furnishing the information to the Commission pursuant to Rule
12g3-2(b)
under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule
12g3-2(b):
n/a
INFORMATION CONTAINED IN THIS FORM
6-K
REPORT
Background
As
previously disclosed, on November 12, 2017, Pacific Drilling S.A. (the Company) and certain of its subsidiaries (collectively with the Company, the Debtors) filed voluntary petitions for relief under Chapter 11 of Title
11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court), which are being jointly administered under the caption
In re Pacific Drilling S.A., et al.
, Case
No. 17-13193
(MEW).
On July 31, 2018, the Debtors filed with the Bankruptcy Court the
Debtors Joint Chapter 11 Plan of Reorganization (the Plan), which provides for the comprehensive restructuring and recapitalization of the Debtors through the following principal transactions:
|
|
|
a $700.0 million issuance of notes maturing at least five years following their issuance, secured by a first-priority security interest in and
lien on certain of the Debtors assets (the First Lien Notes);
|
|
|
|
a $300.0 million issuance of notes maturing at least seven years after their issuance, with interest payable in kind or in cash, at the option of
the issuer, secured by a second-priority security interest in and lien on certain of the Debtors assets (the Second Lien PIK Notes);
|
|
|
|
$500.0 million in new equity offered through a rights offering and a private placement to Holders of Allowed Term Loan B Claims, Allowed 2017
Notes Claims, and Allowed 2020 Notes Claims (each as defined in the Plan), and a private placement to QPGL (as defined below); and
|
|
|
|
the issuance of common shares to Holders of Allowed Term Loan B Claims, Allowed 2017 Notes Claims, and Allowed 2020 Notes Claims.
|
Consummation of the Plan is subject to execution and delivery of definitive agreements, Bankruptcy Court approval,
completion of the restructuring transactions and other customary conditions.
As a result of additional Bankruptcy Court ordered mediation, on
August 15, 2018, the Companys majority shareholder, Quantum Pacific (Gibraltar) Limited (QPGL), and the ad hoc group of holders of the Companys Term Loan B, 2017 Notes and 2020 Notes (the Ad Hoc Group)
reached an agreement (the Global Settlement Agreement), pursuant to which (i) QPGL or one or more of its designees will place orders to purchase $100 million of the First Lien Notes and $100 million of the Second Lien PIK
Toggle Notes to be issued pursuant to the third-party syndicated financing contemplated by the Plan, and (ii) QPGL will commit to purchase $50 million of the new equity of the Company through a private placement. Under the Global
Settlement Agreement, the Company agrees to pay QPGLs reasonable fees and
out-of-pocket
expenses incurred in connection with the Companys Chapter 11
proceedings, not to exceed $13.0 million in the aggregate.
Commitment Letter (New Notes)
In connection with the offering of the First Lien Notes and Second Lien PIK Notes, on August 24, 2018, the Company entered into a commitment letter
with Credit Suisse Securities (USA) LLC (the Initial Purchaser), attached to this report on Form
6-K
as Exhibit 99.1 (the Commitment Letter), pursuant to which, subject to the terms and
conditions in the Commitment Letter, the Initial Purchaser has agreed to (i) execute and deliver a purchase agreement pursuant to which the Initial Purchaser will agree to purchase
from the Company $700.0 million aggregate principal amount of First Lien Notes and (ii) market the Second Lien PIK Notes on an uncommitted basis.
On August 23, 2018, the Bankruptcy Court entered an order approving the Companys entry into the Commitment Letter and authorizing the Debtors
to incur and pay certain related fees and/or premiums, indemnities, costs and expenses.
Second Lien Notes Commitment Agreement
In connection with the offering of the Second Lien PIK Notes, on August 24, 2018, the Company entered into that certain
commitment agreement (as amended on August 29, 2018, the Second Lien Commitment Agreement) with certain members of the Ad Hoc Group (the Second Lien Commitment Parties), attached to this report on Form
6-K
as Exhibit 99.2, pursuant to which, subject to the terms and conditions set forth in the Second Lien Commitment Agreement, the Second Lien Commitment Parties have agreed, severally and not jointly, to purchase
their pro rata share of the Second Lien PIK Notes not purchased in the offering of such notes. In exchange for such commitment, each Second Lien Commitment Party will be entitled to receive its pro rata share of a $24 million Second Lien
Commitment Fee, which is equal to 8% of the initial aggregate principal amount of Second Lien PIK Notes being issued, which will be paid in Second Lien PIK Notes, other than in the event that such Second Lien Commitment Fee is payable in connection
with a termination of the Second Lien Commitment Agreement (as described below), in which case such Second Lien Commitment Fee would be paid in cash.
The Second Lien Commitment Agreement is terminable by the Debtors and/or the Second Lien Commitment Parties under several circumstances, including the termination of the Plan Support Agreement or the
failure of the Second Lien PIK Notes to be issued by 11:59 p.m. on November 30, 2018. The Debtors are also required to pay a termination fee in the amount of $24 million in cash to the Second Lien Commitment Parties if the Second Lien
Commitment Agreement is terminated under certain circumstances.
On August 30, 2018, the Bankruptcy Court approved the backstop
commitment by the Second Lien Commitment Parties and the commitment premium payable to the Second Lien Commitment Parties, in each case as agreed in the Second Lien Commitment Agreement, but the remainder of the Second Lien Commitment Agreement and
related documents referenced therein remain subject to the ongoing review of the Bankruptcy Court.
KEIP
On August 30, 2018, the Bankruptcy Court entered an order approving and authorizing the Debtors implementation of the proposed 2018 key
employee incentive plan (the KEIP) and authorizing the Debtors to make payments to certain employees under the KEIP.
On
August 31, 2018, the Company issued a press release announcing developments in its bankruptcy proceedings. A copy of the press release is attached to this report on Form
6-K
as Exhibit 99.3.
The information contained in this Form
6-K
is for informational purposes only and does not constitute an offer to
buy, nor a solicitation of an offer to sell, any securities of the Company, nor does it constitute a solicitation of consent from any persons with respect to the transactions described herein. While we expect the restructuring to take place in
accordance with the Plan, there can be no assurance that the Company will be successful in completing any restructuring. You are urged to read the disclosure materials, including the Plan and the Disclosure Statement, for additional important
information regarding the restructuring.
The foregoing description of each of the Commitment Letter and the Second Lien Commitment Agreement is only
a summary, does not purport to be complete, and is qualified in its entirety by reference to the Commitment Letter and the Second Lien Commitment Agreement, attached as Exhibits to this report on Form
6-K
and
incorporated herein by reference.
The information contained in this Form
6-K
shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any of the Companys filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set
forth by specific reference in such a filing. The filing of this report on Form
6-K
shall not be deemed an admission as to the materiality of any information herein.
Disclosure Regarding Forward-Looking Statements
Certain statements and information contained herein constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of
1995, and are generally identifiable by the use of words such as anticipate, believe, could, estimate, expect, forecast, intend, our ability to,
may, plan, predict, project, potential, projected, should, will, would, or other similar words, which are generally not historical in nature.
The forward-looking statements speak only as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or
otherwise.
Our forward-looking statements express our current expectations or forecasts of possible future results or events, including our
future financial and operational performance and cash balances; revenue efficiency levels; market outlook; forecasts of trends; future client contract opportunities; contract dayrates; business strategies and plans and objectives of management;
estimated duration of client contracts; backlog; expected capital expenditures; projected costs and savings; the potential impact of our Chapter 11 proceedings on our future operations and ability to finance our business; our ability to complete the
restructuring transactions contemplated by our plan of reorganization; projected costs and expenses in connection with our plan of reorganization; and our ability to emerge from our Chapter 11 proceedings and continue as a going concern.
Although we believe that the assumptions and expectations reflected in our forward-looking statements are reasonable and made in good faith, these
statements are not guarantees, and actual future results may differ materially due to a variety of factors. These statements are subject to a number of risks and uncertainties and are based on a number of judgments and assumptions as of the date
such statements are made about future events, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in such statements due to a variety of factors,
including if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect.
Important factors
that could cause actual results to differ materially from our expectations include: the global oil and gas market and its impact on demand for our services; the offshore drilling market, including reduced capital expenditures by our clients; changes
in worldwide oil and gas supply and demand; rig availability and supply and demand for high specification drillships and other drilling rigs competing with our fleet; costs related to stacking of rigs; our ability to enter into and negotiate
favorable terms for new drilling contracts or extensions; our ability to successfully negotiate and consummate definitive contracts and satisfy other customary conditions with respect to letters of intent and letters of award that we receive for our
drillships; our substantial level of indebtedness; possible cancellation, renegotiation, termination or suspension of drilling contracts as a result of mechanical difficulties, performance, market changes or other reasons; our ability to execute our
business plan and continue as a going concern in the long term; our ability to obtain
Bankruptcy Court approval with respect to motions or other requests made to the Bankruptcy Court in our Chapter 11 proceedings, including maintaining strategic control as debtor
in-possession;
our ability to confirm and consummate our plan of reorganization in accordance with the terms of the Plan and the settlement; risks attendant to the bankruptcy process including the effects of our
Chapter 11 proceedings on our operations and agreements, including our relationships with employees, regulatory authorities, clients, suppliers, banks and other financing sources, insurance companies and other third parties; the effects of our
Chapter 11 proceedings on our Company and on the interests of various constituents, including holders of our common shares and debt instruments; the potential adverse effects of our Chapter 11 proceedings on our liquidity, results of operations, or
business prospects; the outcome of Bankruptcy Court rulings in our Chapter 11 proceedings as well as all other pending litigation and arbitration matters; the length of time that we will operate under Chapter 11 protection and the continued
availability of operating capital during the pendency of the proceedings; our ability to access adequate
debtor-in-possession
financing or use cash collateral; risks
associated with third-party motions in our Chapter 11 proceedings, which may interfere with our ability to timely confirm and consummate our plan of reorganization and restructuring generally; increased advisory costs including administrative and
legal costs to complete our plan of reorganization and other litigation; the risk that our plan of reorganization may not be accepted or confirmed, in which case there can be no assurance that our Chapter 11 proceedings will continue rather than be
converted to Chapter 7 liquidation cases or that any alternative plan of reorganization would be on terms as favorable to holders of claims and interests as the terms of our Plan; the cost, availability and access to capital and financial markets,
including the ability to secure new financing after emerging from our Chapter 11 proceedings; and the other risk factors described in our 2017 Annual Report on Form
20-F
and our Current Reports on Form
6-K.
These documents are available through our website at www.pacificdrilling.com or through the SECs website at www.sec.gov.
The following exhibits are filed as part of this Form
6-K,
each of which is incorporated herein by reference:
|
|
|
Exhibit
|
|
Description
|
|
|
99.1
|
|
Commitment Letter, dated August 24, 2018
|
|
|
99.2
|
|
Commitment Agreement (Second Lien), dated August 24, 2018 (as amended on August 29, 2018)
|
|
|
99.3
|
|
Press Release announcing developments in bankruptcy proceedings, dated August 31, 2018
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
Pacific Drilling S.A.
(Registrant)
|
|
|
|
|
Dated: September 4, 2018
|
|
|
|
By:
|
|
/s/ Johannes P. Boots
|
|
|
|
|
|
|
Johannes P. Boots
|
|
|
|
|
|
|
SVP and Chief Financial Officer
|